Jan 22, 2015

Tip 1-2015: Debt Forgiveness Passed!

On December 3, 2014, the House passed a number of tax breaks that expired at the end of 2013. Included in the tax breaks is the Mortgage Debt Relief Act or Debt Forgiveness Act. On December 16th, the tax breaks passed the Senate and the President sign the bills.  The retroactive extension goes back to January 1, 2014.

The Debt Forgiveness Act helps homeowners who either experienced a short sale or a foreclosure. When a Borrower sells his home for less than what is owed, the bank may agree to forgive the deficiency. Normally, the debt that is forgiven is taxable as ordinary income. If the forgiven debt meets certain conditions, with this tax break, there will be no taxable income to the Borrower who has just lost or short sold his home.

Borrowers should contact their CPA or tax professional in order to understand how this tax break may or may not affect the filing of 2014 taxes.

Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville & Lake Monticello

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